Securities Law

$72M payday for 2 small law firms OK’d by judge

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Citing “true contingency risk,” a Delaware Court of Chancery judge on Wednesday OK’d a $72.5 million attorney’s fees payment to two small law firms that represented the plaintiffs in a shareholder suit against a videogame maker.

The settlement approved by Vice Chancellor J. Travis Laster also included a $275 million payment by Activision Blizzard Inc. and other defendants, which is the largest amount ever agreed to in a shareholder derivative suit, reports Reuters. Court records show the hourly rate for the plaintiffs’ lawyers works out to about $9,500.

“While the size of the award implies a generous hourly rate, in this case it is justified by the effort,” said Laster in the court’s written opinion (PDF).

He pointed to personal loans taken out by lawyers at New York’s Bragar Eagel & Squire and Delaware’s Friedlander & Gorris, as well as the fact that they had forgone other work to pursue the case. The firms have six lawyers and four lawyers, respectively.

They pursued the case against some of the most respected corporate law firms in the country, notes Bloomberg–Sullivan & Cromwell; Skadden Arps Slate Meagher & Flom; and Wachtell Lipton Rosen & Katz were among those representing defendants in the case.

“The litigation in this case was more complex than the typical Court of Chancery case,” wrote Laster. He noted that discovery included “in excess of 800,000 pages of documents from the defendants and numerous non-parties,” and plaintiffs lawyers “had to engage in careful detective work to understand what happened, given the wholesale assertions of privilege and the contemporaneous destruction of documents.”

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